The United Kingdom on Monday indicated that it would soon be approving Stablecoins as a mode of payment. The move is historic as it marks the first step towards legalizing cryptocurrencies in a major European country like the UK.
United Kingdom’s Economic and Finance Ministry announced that the UK would soon amend its regulatory framework to introduce Stablecoins as a means of payment, as reported by Coin Journal.
While experts said it’s too early to say if Britain will indeed legalize cryptocurrencies on the likes of El-Salvador, they do agree that the introduction of Stablecoins may create a domino effect that may finally culminate in the legalization of cryptocurrencies.
Finance Ministry’s statement also reflected this feeling. It said that the amendment of regulation to facilitate Stablecoins was just one aspect of a “package of measures” aimed at incorporating blockchain technology into the UK and creating a “global hub,” reported Coin Journal.
Thus, while the UK is starting with payment as the first item on the list, it may eventually go beyond this niche later and fully embrace the wider crypto industry, too.
One of the most criticized aspects of blockchain-enabled cryptocurrencies like Bitcoins is extreme volatility. They are also decentralized so that no single banking authority, individual, or government controls them.
Thankfully, this is not an issue with Stablecoins. Though Stablecoins are also decentralized digital currencies beyond the control of one single entity and regulator, they are not as volatile as Bitcoins.
Besides, their value is pegged to their fiat counterparts.
According to Economic Times, Stablecoins are cryptocurrencies whose values are pegged to a reserve asset like a fiat currency, commodity, or other cryptocurrencies. One can say that Stablecoins are a tokenized version of the underlying reserve asset and can be introduced subtly into a blockchain ecosystem to facilitate seamless pass transactions, improved arbitrage, and value exchange.
As Stablecoins are blockchain-based, they can be quickly bought, sold, and exchanged as they take less time to process than fiat currencies.
By introducing Stablecoins as a mode of payment, Britain, for the time being, intends to limit them to the payment facilitator only.
On Monday, bullish trends were noticed in the British Treasury’s assessment of Stablecoins and their potential to become a widespread mode of payment, including by retail customers, thus driving consumer choice and efficiencies.
“If crypto technologies are going to be a big part of the future, we–the UK–want to be in and on the ground floor,” said Economic Secretary John Glen at the Innovate Finance Global Summit. “If we commit now, we can lead the way if we act now.”
Commenting on the stable coin move of Britain, an industry expert said that the British government’s effort to introduce stable coin in the payment sector is aimed to keep London “a massive global financial hub” in light of the constantly changing face of financial technology.
Suppose the UK goes ahead with its crypto plans as it indicated on Monday. In that case, it might become the first major country to provide clear guidelines on implementing less volatile cryptocurrencies like Stablecoins as a mode of payment.